For Bloomberg access: {OIAR <GO>}

Soybeans:

November soybeans advanced 14.25 cents on volume of 156,187 contracts. Total volume increased from August 5 when November soybeans lost 13.75 on volume of 120,606 contracts and total open interest increased by 3,651 contracts. On August 6, total open interest declined by 3,600 contracts, which relative to volume is approximately 5% below average. The August contrast lost 776 of open interest, September -160, November -5,859. November beans made a high of 10.81, which matches the high made on August 4 of 10.81. As this report is being compiled on August 7, November soybeans are trading 7.25 cents lower and have made a daily high of 10.84 3/4. In short, since August 1 November soybeans have not been able to rally much beyond the 10.80 area. Although we tend to think an interim low is in place, the abysmal lack of momentum on the upside leads us to the conclusion that the interim low of 10.54 will be tested soon. The only change in this scenario would be a major spate of hot dry weather. November beans remain on a short and intermediate term sell signal. Stand aside.

USDA reported sales of 94.9 thousand metric tons for the 2013-2014 season bringing total commitments to date of 1.694.6 billion bushels versus USDA projections for the entire season of 1.620 billion bushels.

Corn:

September corn advanced 7.00 cents on heavy volume of 252,692 contracts.Volume was slightly above July 24 when September corn lost 1 cent on volume of 251,308 contracts and total open interest increased by 11,447 contracts. On August 6, total open interest declined by 6,222 contracts, which relative to volume is average. The September contract lost 9,877 of open interest and there was insufficient open interest increases in the forward months to offset the decline in the September contract. September corn made a high of 3.64, which is the highest print since July 30 (3.64 1/4). As this report is being compiled on August 7, September corn is trading 5.75 cents lower and has made a daily low of 3.55 3/4. While we think the short side has been played out in most grains, the fact remains that growing conditions have been ideal for corn. September corn remains on a short and intermediate term sell signal. Stand aside.

The USDA reported sales of 120.9 thousand metric tons for the 2013-2014 season bringing total commitments to date of 1.918.7 billion bushels versus USDA projections for the season of 1.900 billion bushels.

Chicago wheat: September Chicago wheat will generate a short-term buy signal on August 7. It remains on an intermediate term sell signal.

September Chicago wheat advanced 15.50 cents on heavy volume of 155,195 contracts.Volume was the strongest since June 11 when 156,278 contracts were traded and September Chicago wheat closed at $6.01 1/2. On August 6, total open interest declined just 9 contracts.The September contract accounted for loss of 4,080 of open interest and there were open interest increases in the December 2014 through July 2015 contracts.

The worsening political and economic situation in Ukraine and the increasing tensions between Russia and the west is providing the impetus for the move higher. At this juncture, it does not appear that Russia is about to ease its aggressive actions, which will increase concern about the ability of Ukraine to continue to reliably export grain.It now appears likely that September Chicago wheat will generate a short-term buy signal on August 7 as long as it remains above OIA’s key pivot point for August 7 of 5.54 5/8. Wait for a pull back.

Usually, after the generation of a short-term buy signal, the market has a tendency to pullback from 1-3 days. However, with the economic and political concerns driving wheat prices, it is difficult to ascertain how much of a pullback will occur.For September Chicago wheat to continue its advance, it must make a daily low above OIA’s 2 key pivot points of 5.71 1/4 and 5.87. The pivot points may act as resistance, and clients should use these as a gauge to determine the strength of the September contract.

The USDA reported sales of 590.9 thousand metric tons for the 2014-2015 season bringing total commitments to date of 379.3 million bushels versus USDA projections for the season of 900 million bushels, which ends on May 31 2015. The reported sale was the second-highest of the season.

Kansas City wheat:

September Kansas City wheat advanced 13.50 cents on volume of 26,027 contracts. Total open interest declined by 616 contracts, which relative to volume is average. The September contract accounted for loss of 1,273 of open interest. On August 6, September KC wheat made a high of 6.61 3/4, which is the highest print since July 9 (6.64). As this report is being compiled on August 7, September KC wheat is trading 5.75 lower while the September Chicago contract is -3.75.

For September KC wheat to generate a short term buy signal, the daily low must be above OIA’s key pivot point of 6.56 5/8. On August 7, the daily low is 6.47, therefore a short-term buy signal will not be generated. We are a bit concerned that during the past 3 trading sessions beginning on August 4, KC prices have advanced each day and yet open interest has declined each day. For example total open interest has declined by 2,708 during the three-day period, and yet September Kansas City prices have advanced 23.50 cents. We know that managed money remains long Kansas City wheat and short Chicago wheat, which may explain the open interest declines of the past 3 days in KC wheat. In other words, speculators long at higher levels are using the rally to exit positions and in Chicago wheat, speculators are covering short positions thereby boosting Chicago wheat prices. This may explain why Chicago wheat will generate a short-term buy signal on August 7, but not Kansas City.

Live cattle:

October live cattle advanced 30 points on light volume of 37,038 contracts. Total open interest increased by a massive 2658 contracts, which relative to volume is approximately 185% above average meaning that both longs and shorts were heavily entering the market, and longs were able to move the market only fractionally higher. As this report is being compiled on August 7, October live cattle are trading down the 3 cent daily limit.

From the August 3 Weekend Wrap:

“We expect the net long position of manage money will decline in next week’s COT report. This sets up a very healthy market condition for an eventual test of the all-time highs. In the meantime, October cattle could decline to its 50 day moving average of 1.51000 and keep its uptrend intact. Likely, a short-term sell signal would be generated if this were to occur. However, the bull move in cattle is by no means over in our view.”

WTI crude oil:

September WTI crude oil lost 46 cents on volume of 559,101 contracts. Total open interest declined by 7,163 contracts, which relative to volume is approximately 45% less than average. The September contract accounted for loss of 12,813 of open interest.Yesterday, September natural gas made a new low for the move at 96.69, which is the lowest print since May 5 (96.43). As this report is being compiled On August 7, September WTI is trading 43 cents higher on the day and has made another new low at 96.55. Continue to hold the short call position recommended in the July 21 report.

Natural gas:

September natural gas advanced 3.6 cents on volume of 190,717 contracts. Total open interest declined by 6,128 contracts, which relative to volume is approximately 30% above average meaning that liquidation was fairly heavy on the modest advance. The September contract accounted for loss of 9,774 of open interest. As this report is being compiled on August 7 after the release of the Energy Information Administration report, September natural gas is trading 5.9 cents lower after making a new high for the move at 3.981, which is the highest print since 3.981 made on July 18. The market filled the gap made between July 18 and July 19. We think natural gas has support at the 200 week moving average of 3.72 on the continuation chart, and that the print of 3.725 made on July 28 will be the seasonal low.September natural gas remains on a short and intermediate term sell signal. Stand aside.

The Energy Information Administration announced that working gas in storage was 2,389 Bcf as of Friday, August 1, 2014, according to EIA estimates. This represents a net increase of 82 Bcf from the previous week. Stocks were 538 Bcf less than last year at this time and 608 Bcf below the 5-year average of 2,997 Bcf. In the East Region, stocks were 284 Bcf below the 5-year average following net injections of 62 Bcf. Stocks in the Producing Region were 252 Bcf below the 5-year average of 1,035 Bcf after a net injection of 14 Bcf. Stocks in the West Region were 73 Bcf below the 5-year average after a net addition of 6 Bcf. At 2,389 Bcf, total working gas is below the 5-year historical range.

Copper: On August 6, September copper generated a short-term sell signal, but remains on an intermediate term buy signal.

September copper lost 3.85 cents on 69,181 contracts. Total open interest declined by 4,845 contracts, which relative to volume is approximately 180% above average meaning that liquidation was extremely heavy on the decline. As this report is being compiled on August 7, September copper is trading 1.25 cents lower.Usually after the generation of a short-term sell signal, the market has a tendency to rally from 1-3 days, and this is the opportunity to initiate bearish positions if you are so inclined. Otherwise, stand aside.

Gold:

December gold advanced $22.90 on fairly heavy volume of 175,133 contracts. Total open interest increased by 6184 contracts, which relative to volume is approximately 40% above average meaning that new longs were aggressively and in sizable numbers entering the market and driving prices higher. On August 6, December gold made a high of 1311.00, and as this report is being compiled on August 7, has made another new high at 1315.50, which is slightly above the high print of 1314.16 made on July 29. For December gold to generate a short-term buy signal, the low the day must be above OIA’s key pivot point of 1315.30.December gold remains on a short and intermediate term sell signal. Stand aside.

Platinum:

October platinum gained $9.30 on volume of 10,479 contracts.Total open interest declined by a massive 1,293 contracts, which relative to volume is approximately 400% above average. Massive liquidation was occurring on a relatively small advance caused in part by the huge number of longs some of whom are long at much higher levels. As this report is being compiled on August 7, October platinum has closed at 1481.50, which is $16.30 above yesterday’s close. For October platinum to generate a short-term buy signal, the daily low must be above OIA’s key pivot point of $1491.00. October platinum remains on a short-term sell signal, but an intermediate term buy signal. Stand aside.

Silver:

September silver advanced 19.1 cents on heavy volume of 64,164 contracts. Total open interest declined by 728 contracts, which relative to volume is approximately 50% below average. As this report is being compiled on August 7, September silver is trading 4.6 cents lower on the day. September silver remains on a short-term sell signal, but an intermediate term buy signal. Stand aside.

10 year Treasury Note: On August 6, the September 10 year Treasury Note generated a short-term buy signal, which reversed the short-term sell signal of July 31. The September note remains on an intermediate term buy signal.

The September 10 year Treasury Note advanced 0.35 points on volume of 1,233,150 contracts. Total open interest declined by 745 contracts. As this report is being compiled on August 7, the 10 year note is trading 10 points higher and has made a new high for the move at 125-290, which is the highest print since 126-000 made on May 29.We have no recommendation.

Coffee:

September coffee advanced 1.45 cents on fairly heavy volume of 31,019 contracts. Total open interest declined by 338 contracts, which relative to volume is approximately 50% below average. The September contract accounted for loss of 3778 of open interest and there were open interest increases in the forward months to offset much of the decline in the September contract. As this report is being compiled on August 7, September coffee has closed sharply lower at 1.8400. It now appears likely that the spike low of 1.8330 made on August 4 will be violated during trading on August 8.We cannot rule out that the short term buy signal generated on July 24 may be reversed. The violation of the August 4 low, would likely send coffee prices on another leg down.For September coffee to generate a short-term sell signal, the high of the day must be below OIA’s key pivot point of 1.7340. As we said in previous reports, do not let a profitable position turn into a loss.